Divi’s Labs is down in the red today morning after SEBI issued an impounding order, stating that eight key management members of the company indulged in insider trading between 7th July to 10th July, 2017.
SEBI has imposed a penalty of Rs.97 lakh on the company’s CFO and seven of his close associates for violating the insider trading rules.
What SEBI unearthed was that the company had announced on 10th July’17, during market hours, that the US FDA was to life the import alert on its Unit-II at Visakhapatnam. On that day, the closing price was up 8% and volumes were up 32 times.
Kiran Devi, a whole-time director of the company knew about this order from the Regulatory Counsel on 7th July itself about the import lift. He forwarded this email to four others, and one among them, forwarded it to 8 others. But the materiality of the impact of the information was discussed in a Board meeting on 10th July.
SEBI, in its order stated that, based on its investigation, L Kishore Babu, Praveen Lingamneni, Nagesh Lingamaneni, Sri Lakshmi Lingamaneni, D. Srinivasa Rao, Radhika Dronavalli, Gopichand Lingamaneni and Pushpa Latha Devi were identified as "insiders" who had, directly or indirectly, traded in the scrip during the Investigation Period."
The stock opened in the red today, down over 5.5% and going down 6.5% to hit an intraday low at Rs.2094.60. It has recouped from this low and is now trading at Rs.2196 levels.